The NITI Aayog has been assigned the task of exploring methods to expand the issuance of green and blue bonds, based on global best practices. The think tank will also investigate ways to increase accessibility to these bonds. The Aayog will present its recommendations to the market regulator, the Securities and Exchange Board of India.
“The objective is to ensure transparency in the bond market by delivering relevant information to investors who wish to assess and compare securities claiming to be green or blue,” stated the unidentified official. “However, no concrete decisions have been made yet.”
Green bonds are financial instruments designed to raise investment for environmentally friendly projects such as renewable energy, sustainable transportation, climate change adaptation, and sustainable waste management.
In contrast, blue bonds support the sustainable utilization of ocean resources, promoting livelihood and development while preserving the ocean ecosystem. They are used to finance initiatives like sustainable fishing, ocean resource mining, and efforts to restore deteriorating coral reefs.
However, experts note that inadequate liquidity, low yields, and greenwashing continue to be significant concerns.
“The lack of incentives for issuing green bonds and the absence of a dedicated scheme have contributed to very low demand for such bonds in India,” explained Ajay Manglunia, managing director of JM Financials.